SOLITARIO RESOURCES CORP. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with the information contained in the consolidated financial statements of Solitario for the years ended December 31, 2020 and 2019, and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in Solitario’s Annual Report on Form 10-K for the year ended December 31, 2020. Solitario's financial condition and results of operations are not necessarily indicative of what may be expected in future periods. Unless otherwise indicated, all references to dollars are to U.S. dollars. (a) Business Overview and Summary We are an exploration stage company as defined by rules issued by the SEC, with a focus on the acquisition of precious and base metal properties with exploration potential and the development or purchase of royalty interests. Currently our primary focus is the acquisition and exploration of zinc-related and precious metals exploration mineral properties. However, we continue to evaluate other mineral properties for acquisition, and we hold a portfolio of mineral exploration properties and assets for future sale, joint venture or on which to create a royalty prior to the establishment of proven and probable reserves. Although our mineral properties may be developed in the future by us, through a joint venture or by a third party, we have never developed a mineral property. In addition to focusing on our current mineral exploration properties, we also from time to time evaluate potential strategic transactions for the acquisition of new precious and base metal properties and assets with exploration potential. Our current geographic focus for the evaluation of potential mineral property assets is in North and South America; however, we have conducted property evaluations for potential acquisition in other parts of the world. At June 30, 2021, we consider our carried interest in the Florida Canyon project in Peru, our interest in the Lik project in Alaska, and our newly acquired Golden Crest project to be our core mineral property assets. In addition, at June 30, 2021, we have an interest in one exploration property in Arizona. We are conducting exploration activities in Peru and the United States both on our own and through joint ventures operated by our partners in Peru and the United States, respectively. We also conduct potential acquisition evaluations in other countries located in South and North America. We have recorded revenue in the past from the sale of mineral properties, including from the Royalty Sale in January 2019 and the sale in June 2018 of our interest in the royalty on the Yanacocha property. Revenues and / or proceeds from the sale or joint venture of properties or assets, although generally significant when they have occurred in the past, have not been a consistent source of revenue and would only occur in the future, if at all, on an infrequent basis. We have reduced our exposure to the costs of our exploration activities in the past through the use of joint ventures. Although we anticipate that the use of joint venture funding for some of our exploration activities will continue for the foreseeable future, we can provide no assurance that these or other sources of capital will be available in sufficient amounts to meet our needs, if at all. As of June 30, 2021, we have balances of cash and short-term investments that we anticipate using, in part, to (i) fund costs and activities intended to further the exploration of our Lik project, (ii) fund costs and activities intended to further the exploration at our Florida Canyon project, (iii) fund costs and activities intended to further our Golden Crest project; (iv) conduct reconnaissance exploration and (v) potentially acquire additional mineral property assets. The fluctuations in precious metal and other commodity prices contribute to a challenging environment for mineral exploration and development, which has created opportunities as well as challenges for the potential acquisition of advanced mineral exploration projects or other related assets at potentially attractive terms. As of June 30, 2021, we do not expect the effects of the COVID-19 pandemic to have a material effect on Solitario’s planned activities related to the exploration of its Lik, Florida Canyon or Golden Crest projects. However, we continue to monitor planned activities for the full year 2021 at our Florida Canyon, Lik and Golden Crest projects. The extent to which the COVID-19 pandemic impacts our business, including our exploration and other activities and the market for our securities, will depend on future developments, which are highly uncertain and cannot be predicted at this time. Please see Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2020. 15 Table of Contents (c) Results of Operations Comparison of the three months ended June 30, 2021 to the three months ended June 30, 2020 We had a net loss of $668,000 or $0.01 per basic and diluted share for the three months ended June 30, 2021 compared to net income of $255,000 or $0.00 per basic and diluted share for the three months ended June 30, 2020. As explained in more detail below, the primary reasons for our net loss in the three months ended June 30, 2021 compared to net income during the three months ended June 30, 2020 were (i) an increase in exploration expense to $237,000 in the three months ended June 30, 2021 compared to exploration expense of $44,000 during the three months ended June 30, 2020; (ii) an increase in general and administrative expense to $256,000 in the three months ended June 30, 2021 compared to general and administrative expense of $254,000 during the three months ended June 30, 2020; (iii) other income of $44,000 during the three months ended June 30, 2020 resulting from the conversion of the SilverStream Note, with no similar item during the three months ended June 30, 2021; (iv) an unrealized loss on marketable equity securities of $148,000 during the three months ended June 30, 2021 compared to an unrealized gain on marketable equity securities of $484,000 during the three months ended June 30, 2020; (v) a reduction in interest income to $4,000 during the three months ended June 30, 2021 compared to interest income of $27,000 during the three months ended June 30, 2020; and (vi) a loss on derivative instruments of $30,000 during the three months ended June 30, 2021 compared to a gain of $5,000 during the three months ended June 30, 2020. Partially offsetting the above items was the recognition of a gain of $6,000 on the sale of marketable equity securities during the three months ended June 30, 2021 with no similar item during the three months ended June 30, 2020. Each of the major components of these items is discussed in more detail below. Our net exploration expense increased to $237,000 during the three months ended June 30, 2021 compared to exploration expense of $44,000 during the three months ended June 30, 2020 as a result of (i) our exploration efforts at the newly acquired Golden Crest project which resulted in $113,000 of direct exploration expenditures during the three months ended June 30, 2021 with no similar expense in the three months ended June 30, 2020; (ii) exploration costs of $82,000 at our Lik project in Alaska during the three months ended June 30, 2021 incurred by our joint venture partner Teck compared to a net credit of $43,000 from a one-time non-cash credit to our accrued expenses at our Lik project of $52,000 during the three months ended June 30, 2020, resulting from the billing of 2019 exploration expenditures from our joint venture partner Teck reflecting that Teck did not spend the entirety of the budgeted expenditures at the Lik project during 2019, which we had accrued; and (iii) expenditures of $14,000 at our Florida Canyon project during the three months ended June 30, 2021 compared to $4,000 spent at Florida Canyon during the three months ended June 30, 2020. These increases in exploration expenditures were partially offset by a decrease in our reconnaissance exploration activities primarily related to the evaluation of mineral properties and / or entities for potential acquisition or other strategic transactions to $28,000 during the three months ended June 30, 2021 compared to $83,000 during the three months ended June 30, 2020. During the three months ended June 30, 2021 we had three contract geologists working our Golden Crest project, and our Denver personnel spent a portion of their time on reconnaissance exploration activities described above and related matters. We have budgeted approximately $1,642,000 for the full-year exploration expenditure for 2021, which includes approximately $622,000 for Solitario’s share of a joint drilling program with Teck at the Lik project, with the bulk of those expenditures planned for the third and fourth quarter of 2021. We expect our full-year exploration expenditures for 2021 to be above the exploration expenditures for full-year 2020. Exploration expense (in thousands) by project consisted of the following: Three months ended June 30, Six months ended June 30, Project Name 2021 2020 2021 2020 Florida Canyon $ 14 $ 4 $ 64 $ 6 Lik 82 (43 ) 83 (38 ) Golden Crest 113 - 113 - Gold Coin - - 9 - Reconnaissance 28 83 115 189 Total exploration expense $ 237 $ 44 $ 384 $ 157 16 Table of Contents General and administrative costs, excluding stock option compensation costs, discussed below, were $210,000 during the three months ended June 30, 2021 compared to $124,000 during the three months ended June 30, 2020. The major components of our general and administrative costs were (i) salaries and benefit expense of $68,000 during the three months ended June 30, 2021 compared to salary and benefit costs of $61,000 during the three months ended June 30, 2020; (ii) legal and accounting expenditures of $42,000 in the three months ended June 30, 2021 compared to $12,000 in the three months ended June 30, 2020, with the increase primarily as a result of certain ongoing costs related to our 2021 ATM Program; (iii) office rent and expenses of $24,000 during the three months ended June 30, 2021, compared to $13,000 during the three months ended June 30, 2020; and (iv) travel and shareholder relation costs of $76,000 during the three months ended June 30, 2021 compared to $38,000 during the three months ended June 30, 2020. We anticipate the full-year general and administrative costs will be higher for 2021 compared to 2020. We recorded $44,000 of stock option compensation expense for the amortization of unvested grant date fair value with a credit to additional paid-in-capital during the three months ended June 30, 2021 compared to $130,000 of stock option compensation expense during the three months ended June 30, 2020. These non-cash charges related to the expense for vesting on stock options outstanding during the three months ended June 30, 2021 and 2020. The primary reason for the decrease in 2021 was the grant of 1,325,000 options on April 2, 2020 with a grant date fair value of $145,000 compared to grants of options during the three months ended June 30, 2021 with grant date fair values of $58,000. The options vest 25% on the date of grant and we recognized $14,000 of grant date fair value for these options on the date of grant during the three months ended June 30, 2021 compared to $36,000 for the options granted during the three months ended June 30, 2020. In addition, certain options previously granted became fully vested during 2020, which reduced the amortization of grant date fair value expense during the three months ended June 30, 2021 compared to the same period of 2020. See Note 11, “Employee Stock Compensation Plans,” above, for additional information on our stock option expense. We recorded a non-cash unrealized loss on marketable equity securities of $148,000 during the three months ended June 30, 2021 compared to an unrealized gain on marketable equity securities of $484,000 during the three months ended June 30, 2020. The non-cash unrealized loss during the three months ended June 30, 2021 was primarily related to (i) a decrease in the value of our holdings of 100,000 shares of Kinross common stock, which decreased to a fair value of $635,000 at June 30, 2021 from a fair value of $667,000 at March 31, 2021 or an decrease of $32,000 based on quoted market prices; and (ii) a decrease in the value of our 10,540,000 shares of Vendetta common stock, which decreased from a fair value of $503,000 at March 31, 2021 to a fair value of $383,000 at June 30, 2021 or a decrease of $120,000, based on quoted market prices. The unrealized gain during the three months ended June 30, 2020 was primarily related to (i) an increase in the value of our holdings of 100,000 shares of Kinross common stock, which increased to a fair value of $722,000 at June 30, 2020 from a fair value of $398,000 at March 31, 2020 or an increase of $324,000 based on quoted market prices; and (ii) an increase in the value of our 12,450,000 shares of Vendetta common stock, which increased from a fair value of $350,000 at March 31, 2020 to a fair value of $457,000 at June 30, 2020 or an increase of $107,000, based on quoted market prices. During the three months ended June 30, 2021, we sold 143,000 shares of our holdings of Vox common stock for proceeds of $10,000 and recorded a gain on sale of marketable equity securities of $6,000, with no similar sales during the three months ended June 30, 2020. See Note 3 “Marketable Equity Securities” to the condensed consolidated financial statements for a discussion of the sale of Vendetta common stock. During the three months ended June 30, 2021, we recorded a non-cash loss on derivative instruments of $30,000, primarily related to a reduction in the value of our holdings of Vendetta Warrants which were recorded at a fair value of $9,000 at June 30, 2021, based upon a Black-Scholes model, compared to a fair value of $46,000 at March 31, 2021 or a non-cash loss of $37,000, which was partially offset by a gain on derivative instruments of $7,000 during the three months ended June 30, 2021 related to certain Kinross covered calls. During the three months ended June 30, 2020, we recorded a non-cash gain on derivative instruments of $5,000 primarily related to an increase in the value of our holdings of Vendetta Warrants. We recorded interest income of $4,000 during the three months ended June 30, 2021 compared to interest income of $27,000 during the three months ended June 30, 2020. This reduction was primarily due to a decrease in the interest earned on our short-term investments in USTS as a result of (i) a decrease in the total amount of outstanding short-term investments during the three months ended June 30, 2021 compared to the three months ended June 30, 2020; and (ii) the average interest rates on our existing short-term investments was lower during the three months ended June 30, 2021 compared to the average interest rates received during the three months ended June 30, 2020. We regularly perform evaluations of our mineral property assets to assess the recoverability of our investments in these assets. All long-lived assets are reviewed for impairment whenever events or circumstances change which indicate the carrying amount of an asset may not be recoverable utilizing guidelines based upon future net cash flows from the asset as well as our estimates of the geological potential of an early-stage mineral property and its related value for future sale, joint venture or development by us or others. During the three months ended June 30, 2021 and 2020, we recorded no property impairments. 17 Table of Contents We recorded no income tax expense or benefit during the three months ended June 30, 2021 or 2020 as we provide a valuation allowance for the tax benefit arising out of our net operating losses for all periods presented. As a result of our administrative expenses and exploration activities, we anticipate we will not have currently payable income taxes during 2021. In addition to the valuation allowance discussed above, we provide a valuation allowance for our foreign net operating losses, which are primarily related to our exploration activities in Peru. We anticipate we will continue to provide a valuation allowance for these net operating losses until we are in a net tax liability position with regards to those countries where we operate or until it is more likely than not that we will be able to realize those net operating losses in the future. Comparison of the six months ended June 30, 2021 to the six months ended June 30, 2020 We had a net loss of $1,196,000 or $0.02 per basic and diluted share for the six months ended June 30, 2021 compared to a net loss of $352,000 or $0.01 per basic and diluted share for the six months ended June 30, 2020. As explained in more detail below, the primary reasons for the increase in our net loss were (i) an increase in exploration expense to $384,000 during the six months ended June 30, 2021 compared to exploration expense of $157,000 during the six months ended June 30, 2020; (ii) an unrealized loss on marketable equity securities of $270,000 during the six months ended June 30, 2021 compared to an unrealized gain on marketable equity securities of $251,000 during the six months ended June 30, 2020; (iii) a decrease in other income to $10,000 from the forgiveness of our PPP loan during the six months ended June 30, 2021 compared to other income of $44,000 from the conversion of the SilverStream Note, discussed above, during the six months ended June 30, 2020; (iv) a decrease in interest income to $10,000 during the six months ended June 30, 2021 compared to interest income of $108,000 during the six months ended June 30, 2020; and (v) the recording of a realized gain of $19,000 from the sale of marketable equity securities during the six months ended June 30, 2021 compared with a realized gain of $25,000 during the three months ended June 30, 2020. These causes of the increase in our net loss during the first six months of 2021 compared to the first six months of 2020 were partially offset by a reduction in general and administrative costs to $536,000 during the six months ended June 30, 2021 compared to general and administrative costs of $590,000 during the six months ended June 30, 2020. The significant changes for these items are discussed in more detail below. Our net exploration expense increased to $384,000 during the six months ended June 30, 2021 compared to $157,000 during the six months ended June 30, 2020. The primary reasons for the increase were(i) the exploration activity at our Golden Crest project of $113,000 and our Gold Coin project in Arizona of $9,000 during the six months ended June 30, 2021 with no similar expenditures during the six months ended June 30, 2020; (ii) exploration expenditures at our Lik project in Alaska of $83,000 during the six months ended June 30, 2021, where our joint venture partner, Teck, began work on a planned $1.24 million exploration program for 2021, compared to a net credit of $38,000 at Lik from a credit of $52,000, discussed above, recorded during the six months ended June 30, 2021; and $64,000 in exploration expenditures at our Florida Canyon project during the six months ended June 30, 2021, where we are preparing an analysis of the Florida Canyon deposit for future drilling or expansion, compared to expenditures of $6,000 during the six months ended June 30, 2020. These increases in exploration expense were partially offset by a reduction in our reconnaissance exploration activity to $115,000 during the six months ended June 30, 2021 compared to $189,000 during the six months ended June 30, 2020. General and administrative costs, excluding stock option compensation costs discussed below, were $463,000 during the six months ended June 30, 2021 compared to $375,000 during the six months ended June 30, 2020. The major components of the costs were (i) salary and benefit expense during the six months ended June 30, 2021 of $136,000 compared to salary and benefit expense of $144,000 during the six months ended June 30, 2020, with these decreases as a result of personnel and salary reductions; (ii) legal and accounting expenditures of $101,000 during the six months ended June 30, 2021, compared to $23,000 during the six months ended June 30, 2020; (iii) office and other costs of $44,000 during the six months ended June 30, 2021 compared to $60,000 during the six months ended June 30, 2020; and (iv) travel and shareholder relation costs of $182,000 during the six months ended June 30, 2021 compared to $148,000 during the six months ended June 30, 2020. 18 Table of Contents During the six months ended June 30, 2021 and 2020, Solitario recorded $73,000 and $215,000, respectively, of stock option expense for the amortization of unvested grant date fair value with a credit to additional paid-in capital. The decrease during the six months ended June 30, 2021 was primarily related to the stock option expense for the options granted on April 2, 2020, discussed above, compared to the lower grant date fair value of stock options granted in the six months ended June 30, 2021 as well as certain previously granted options becoming fully vested during 2020 which reduced the stock option amortization expense during the first six months of 2021 compared to the first six months of 2020. We recorded an unrealized loss on marketable equity securities of $270,000 during the six months ended June 30, 2021 compared to an unrealized gain on marketable equity securities of $251,000 during the six months ended June 30, 2020. The non-cash unrealized loss during the six months ended June 30, 2021 was primarily related to (i) a decrease in the value of our holdings of 10,540,000 shares of Vendetta common stock which decreased in fair value to $383,000 at June 30, 2021 compared to a fair value of $496,000 at December 31, 2020, based on quoted market prices; and (ii) a decrease in the fair value of our holdings of 100,000 shares of Kinross common stock to a fair value of $635,000 compared to a fair value of $734,000 at December 31, 2020, based on quoted market prices. The non-cash unrealized gain during the six months ended June 30, 2020 was primarily related to an increase in the value of our holdings of 100,000 shares of Kinross common stock which increased to a fair value of $722,000 at June 30, 2020 compared to a fair value of $474,000 at December 31, 2019 based on quoted market prices. This increase was partially offset by a decrease in the value of our holdings of 12,450,000 shares of Vendetta common stock, which decreased from a fair value of $479,000 at December 31, 2019 to a fair value of $457,000 at June 30, 2020, based on quoted market prices. We may reduce our holdings of marketable equity securities depending on cash needs and market conditions, which may reduce the volatility of the changes in unrealized gains and losses in marketable equity securities during the remainder of 2021. Our interest income on short-term investments decreased to $10,000 during the six months ended June 30, 2021 compared to interest income of $108,000 during the six months ended June 30, 2020 primarily as a result of (i) the effects of reduced interest rates , which increased the quoted market price of our outstanding USTS holdings during the six months ended June 30, 2020, with the increase in value recorded as interest income, with the opposite effect in 2021, as slightly rising interest rates, reduced the quoted price of our USTS during the six months ended June 30 2021; (ii) the reduced interest rate earned on our holdings of USTS and CDs during the six months ended June 30, 2021 compared to the six months ended June 30, 2020; and (iii) our lower balance of holdings of short-term investments reducing the interest earned during the six months ended June 30, 2021 compared to the six months ended June 30, 2020; We anticipate as we utilize our short-term investments to provide funds for exploration and general and administrative expenses our interest income will be reduced during the remainder of 2021 compared to 2020. During the six months ended June 30, 2021, we sold (i) 1,010,000 shares of Vendetta common stock for proceeds of $51,000 and recorded a loss on sale of $2,000; (ii) 430,000 shares of TNR Gold Corp. common stock for proceeds of $28,000 and recorded a gain on sale of $19,000 and (iii) 3,200 shares of Vox common stock for proceeds of $9,000 and recorded a gain on sale of $2,000. During the six months ended June 30, 2020, we sold 2,000,000 shares of our holdings of Vendetta common stock for proceeds of $76,000 and recorded a gain on sale of marketable equity securities of $25,000. See Note 3 “Marketable Equity Securities” to the condensed consolidated financial statements for a discussion of the sale of marketable equity securities. (d) Liquidity and Capital Resources Cash and Short-term Investments As of June 30, 2021, we have $5,653,000 in cash and short-term investments. As of June 30, 2021, we have $4,145,000 of our current assets in USTS with maturities of 15 days to 30 months. In addition, we have $1,103,000 of current assets in six CDs with face values between $100,000 and $250,000 and maturities between one and ten months. The USTS and CDs are recorded at their fair value based upon quoted market prices. We anticipate we will roll over that portion of our short-term investments not used for exploration expenditures, operating costs or mineral property acquisitions as they become due during the remainder of 2021. We intend to utilize a portion of our cash and short-term investments in our exploration activities and the potential acquisition of mineral assets over the next several years. 19 Table of Contents Investment in Marketable Equity Securities Our marketable equity securities are carried at fair value, which is based upon market quotes of the underlying securities. At June 30, 2021 we own 10,540,000 shares of Vendetta common stock, 100,000 shares of Kinross common stock and 134,055 shares of Vox common stock. At June 30, 2021, the Vendetta shares are recorded at their fair market value of $383,000, the Kinross shares are recorded at their fair value of $635,000; and the Vox shares are recorded at their fair value of $263,000. During the six months ended June 30, 2021 we sold 1,010,000 shares of Vendetta common stock, 430,000 shares of TNR Gold Corp. common stock and 3,200 shares of Vox common stock, as discussed above. See Note 3 “Marketable Equity Securities” in the condensed consolidated financial statements. We anticipate we may sell some additional holdings of our marketable equity securities during the remainder of 2021 depending on cash needs and market conditions. Working Capital We had working capital of $6,481,000 at June 30, 2021 compared to working capital of $7,875,000 as of December 31, 2020. Our working capital at June 30, 2021 consists primarily of our cash and cash equivalents, our investment in USTS and CDs, discussed above, our investment in marketable equity securities of $1,281,000, and other current assets of $21,000, less our accounts payable of $438,000 and other current liabilities of $36,000. As of June 30, 2021, our cash balances along with our short-term investments and marketable equity securities are adequate to fund our expected expenditures over the next year. The nature of the mineral exploration business requires significant sources of capital to fund exploration, development and operation of mining projects. We will need additional capital if we decide to develop or operate any of our current exploration projects or any projects or assets we may acquire. We anticipate we would finance any such development through the use of our cash reserves, short-term investments, joint ventures, issuance of debt or equity, or the sale of our interests in other exploration projects or assets. Stock-Based Compensation Plans As of both June 30, 2021, and December 31, 2020 there were options outstanding to acquire 5,513,000 and 5,558,000 shares, respectively, of Solitario common stock. The outstanding options have exercise prices between $0.77 per share and $0.20 per share. During the six months ended June 30, 2021, options for 185,000 shares were exercised with an average exercise price of $0.45 per share for proceeds of $83,000. There were no exercises of options during the six months ended June 30, 2021. We do not anticipate the exercise of options to be a significant source of cash flow during the remainder of 2021. At the Market Offering Agreement On February 2, 2021, we entered into the ATM Agreement with Wainwright, under which we may, from time to time, issue and sell shares of our common stock through Wainwright as sales manager in an at-the-market offering under a prospectus supplement for aggregate sales proceeds of up to $9.0 million. During the six months ended June 30, 2021, we sold an aggregate of 150,400 shares of common stock under the ATM Program at an average price of $1.21 per share of common stock for net proceeds after commissions and expenses of approximately $177,000. During the six months ended June 30, 2021, Solitario recorded $144,000 as a charge to additional paid-in-capital for one-time expenses related to entering into the ATM Agreement. Share Repurchase Program On October 28, 2015, our Board of Directors approved a share repurchase program that authorized us to purchase up to two million shares of our outstanding common stock. During 2020, our Board of Directors extended the term of the share repurchase program until December 31, 2021. All shares purchased to date have been cancelled and reduced the number of shares of outstanding common stock. The amount and timing of any shares purchased has been determined by our management and the purchases were effected in the open market or in privately negotiated transactions based upon market conditions and other factors, including price, regulatory requirements and capital availability and in compliance with applicable state and federal securities laws. The repurchase program does not require the purchase of any minimum number of shares of common stock by the Company, and may be suspended, modified or discontinued at any time without prior notice. No purchases have been made outside of the United States, including on the TSX. Payments for shares of common stock repurchased under the program have been funded using the Company’s working capital. As of June 30, 2021, Solitario has purchased a total of 990,400 shares for an aggregate purchase price of $466,000 under the share repurchase program since its inception and these shares are no longer included in our issued and outstanding shares. We did not purchase and shares under the share repurchase plan during the six months ended June 30, 2021. Subject to any legal restrictions and our available financial resources, we anticipate we will continue to purchase a limited number of shares under the share repurchase plan during 2021 as determined by management. 20 Table of Contents (e) Cash Flows Net cash used in operations during the six months ended June 30, 2021 increased to $730,000 compared to $521,000 of net cash used in operations for the six months ended June 30, 2020 primarily as a result of (i) a decrease in interest income during the six months ended June 30, 2021 to $10,000 compared to interest income of $108,000 during the six months ended June 30, 2020, (ii) an increase in exploration expense to $384,000 during the six months ended June 30, 2021 compared to exploration expense of $157,000 during the six months ended June 30, 2020 and (iii) an increase in non-stock option general and administrative expense to $463,000 during the six months ended June 30, 2021 compared to $375,000 during the six months ended June 30, 2020, discussed above. Partially offsetting these increases in the use of cash were (i) a decrease in prepaid expenses of $61,000 during the six months ended June 30, 2021 compared to a decrease in prepaid expenses of $8,000 during the six months ended June 30, 2020, and (ii) $27,000 for the provision of cash from an increase of accounts payable and other liabilities during the six months ended June 30, 2021 compared to the use of cash from a decrease in accounts payable and other liabilities of $125,000 during the six months ended June 30, 2020. Based upon projected expenditures in our 2021 budget, we anticipate continued use of funds from operations through the remainder of 2021, primarily for exploration related to our Lik and Golden Crest projects and reconnaissance exploration. See “Results of Operations” discussed above for further explanation of some of these variances. During the six months ended June 30, 2021, we provided $349,000 in cash from investing activities compared to $252,000 of cash provided from investing activities during the six months ended June 30, 2020. The primary sources of the cash provided related to the net proceeds from short-term investment sales and purchases of $494,000 and $162,000, respectively, during the six months ended June 30, 2021 and 2020. During the six months ended June 30, 2021 we acquired the Golden Crest project, discussed above in Note 2, “Mineral Property” for $374,000, of which $173,000 were accrued costs in accounts payable at June 30, 2021 and we acquired other assets of $39,000 during the six months ended June 30, 2021, with no similar items in the six months ended June 30, 2020. In addition, during the six months ended June 30, 2021 and 2020 we sold marketable equity securities for proceeds of $88,000 and $76,000, respectively, as discussed above in Note 3, “Marketable Equity Securities.” We may sell additional marketable equity securities during the remainder of 2021, as discussed above. However, we do not anticipate the sale of marketable equity securities will be a significant source of cash during the remainder of 2021. We will continue to liquidate a portion of our short-term investments as needed to fund our operations and our potential mineral property acquisitions during the remainder of 2021. Any potential mineral property acquisition or strategic corporate investment during the remainder of 2021, discussed above under “Business Overview and Summary,” could involve a significant change in our cash provided or used for investing activities, depending on the structure of any potential transaction. During the six months ended June 30, 2021, we recorded net proceeds of $33,000 from the issuance of common stock pursuant to the ATM Program, discussed above in Note 11, “Shareholders’ Equity.” However, we have accrued costs included in accounts payable of $65,000 as of June 30, 2021, which will reduce the net cash proceeds of $98,000 received as of June 30, 2021 to $33,000 when paid subsequent to June 30, 2021. We received $83,000 from the issuance of common stock from the exercise of stock options, discussed above in Note 11, “Employee Stock Compensation Plans,” with no comparable amount during the six months ended June 30, 2021. During the six months ended June 30, 2020 we received $70,000 from the PPP Loan and we used $4,000 for the purchase of our common stock, with no comparable amounts during the six months ended June 30, 2021, as discussed above under “Share Repurchase Program” in “Liquidity and Capital Resources.” 21 Table of Contents (f) Off-balance sheet arrangements As of June 30, 2021, and December 31, 2020 we had no off-balance sheet obligations. (g) Development Activities, Exploration Activities, Environmental Compliance and Contractual Obligations We are not involved in any development activities, nor do we have any contractual obligations related to any potential development activities as of June 30, 2021. As of June 30, 2021, there have been no changes to our contractual obligations for exploration activities, environmental compliance or other obligations from those disclosed in our Management’s Discussion and Analysis included in our Annual Report on Form 10-K for the year ended December 31, 2020. (h) Discontinued Projects We did not record any mineral property write-downs during the three and six months ended June 30, 2021 and 2020. (i) Critical Accounting Estimates Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 1 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2020, describes the significant accounting estimates and policies used in preparation of our consolidated financial statements. Actual results in these areas could differ from management’s estimates. (j) Related Party Transactions As of June 30, 2021, and for the three and six months ended June 30, 2021, we have no related party transactions or balances. (k) Recent Accounting Pronouncements See Note 1, “Business and Summary of Significant Accounting Policies,” to the unaudited condensed consolidated financial statements under Recent Accounting Pronouncements” above for a discussion of our significant accounting policies. 22 Table of Contents (l) Forward Looking Statements This Form 10-Q contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “1934 Act”), with respect to our financial condition, results of operations, business prospects, plans, objectives, goals, strategies, future events, capital expenditures, and exploration and development efforts. Words such as “anticipates,” “expects,” “intends,” “forecasts,” “plans,” “believes,” “seeks,” “estimates,” “may,” “will,” and similar expressions identify forward-looking statements. These forward-looking statements are based on our current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements described herein and under the heading “Risk Factors” included in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2020. These forward-looking statements appear in a number of places in this report and include statements with respect to, among other things: · Our estimates of the value and recovery of our short-term investments; · Our estimates of future exploration, development, general and administrative and other costs; · Our ability to realize a return on our investment in the Lik and Golden Crest projects; · Our ability to successfully identify, and execute on transactions to acquire new mineral exploration properties and other related assets; · Our estimates of fair value of our investment in shares of Vendetta, Vox and Kinross; · Our expectations regarding development and exploration of our properties including those subject to joint venture and shareholder agreements; · The impact of political and regulatory developments; · Our future financial condition or results of operations and our future revenues and expenses; · Our business strategy and other plans and objectives for future operations; and · Risks related to pandemics, including the COVID-19 pandemic. 23 Table of Contents Although we have attempted to identify important factors that could cause actual results to differ materially from those described in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that these statements will prove to be accurate as actual results and future events could differ materially from those anticipated in the statements. Except as required by law, we assume no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. Item 3. Quantitative and Qualitative Disclosures about Market Risk Smaller Reporting Companies are not required to provide the information required by this item.